Aviva boss credits Brexit for surge in profits to £3.1bn

Here's something you don't see every day - a top boss who actually thinks Brexit is benefiting his business.

And even more unusually, it's a boss based in the City, where, apart from car-making, there is probably more uncertainty concerning Brexit than in almost any other business sector.

That boss is Mark Wilson, the hard-driving chief executive of Aviva, who argues Brexit has actually helped the insurer because, at times of uncertainty, customers gravitate towards trusted brands.

He told investors today: "Brexit's interesting, isn't it? Despite all the doom and the gloom that was predicted by many commentators in the market, we have significantly increased sales and increased market share and increased profit in the UK. There's partly been a flight to quality, and a flight to the big brands, and we have clearly been a beneficiary of that."

The UK was one of a number of highlights as Aviva, Britain's second-largest insurer after Prudential, reported strong signs of growth in all parts of its business apart from Canada.

Full year operating profit rose by 2%, to £3.1bn, while the company generated £2.4bn worth of cash.

It means that, with plenty of capital set aside to satisfy regulators, Aviva is now in a position where, some might say, it is generating more cash than it knows what to do with.

That's a question that will be of particular interest to more than half a million small investors.

They in most cases own shares in Aviva due to its past Norwich Union business which, in 2000, merged with CGU - a company itself created by the merger, two years earlier, between Commercial Union and General Accident.

Kiwi Mr Wilson plans to use some of that capital to pay down £900m of debt this year: "It's a no-brainer. This debt reduction alone adds £60m annualised cash benefit each year."

That has irked some shareholders - hence today's fall in the share price - who had hoped they might get a bit more of the spoils.

There will though be "at least" £500m for capital returns to shareholders, on top of the 18% increase in the dividend announced today, making it the fourth consecutive year that the company has raised its pay-out by more than 10%.

The other big question being asked of Aviva is where future growth will come from.

For the last few years, Prudential has been the City's darling in the insurance sector, due to its strong positions in Asia's fast-growing markets and the dynamic US market. Aviva, by contrast, is more heavily exposed to mature markets in Europe, particularly the UK, France, Poland and Italy, that have been regarded as offering lower growth prospects.

Mr Wilson argues this assumption is wrong: "I believe the insurance world has fundamentally changed and reached an inflection point. For a start, the macro environment has changed and GDP growth rates in emerging and mature markets are converging.

"For example, there is now little difference between the US, Singapore, Hong Kong, Turkey and Europe on GDP growth.

"Growth is no longer region-based or even market-specific based. I believe growth in our industry is now segment-based. And the key is to be positioned in those growth segments and for change in those markets.

"And while our businesses are concentrated in developed markets, as we have seen, in 2017, it certainly does not equate to being ex-growth. We're seeing growth across the board and margins in our more developed markets are more robust because the more irrational players have exited. There are fewer competitors."

"It may surprise some people to know that the UK, our biggest market, went from strength to strength. We grew sales, we grew market share, we grew profit. The UK is a dependable and growing market."

Aviva has also been investing heavily in digital - an area Mr Wilson believes has potential to transform insurance.

But it has also earmarked £600m of its surplus capital for bolt-on acquisitions where it thinks there is an opportunity to grow. Among the bets already placed is in Ireland, where in November Aviva became one of the country's biggest insurers, paying €131m for Friends First.

Other markets where it is looking to bulk up include Poland and Turkey where, according to Mr Wilson, "it's entirely appropriate to think long term and invest a little for long-term growth."

Shareholders - including those half a million small investors - will be hoping the company can, in his words, discover treasure chests rather than sunken galleons.